The good news is that there is a $25.7B market for RSH credit default swaps. Credit default swaps were originally created so that a company’s creditors could buy insurance in case the company couldn’t pay back its debt. But just like life insurance, anyone can buy a CDS on anybody (as long as there’s a seller).

Now some third parties stand to gain $25.7 billion if RadioShack decides to go under, which is kind of like 31 people holding life insurance policies on your mother, if your mother was RadioShack.

The contract sellers don’t want to pay out $25.7 billion, so they went ahead and loaned RadioShack more money to keep it on life support. At this point I suspect that Radio Shack would just like to be put out of its own misery, but the counterparties are hedge funds with lots of money.

I guess the moral of the story is, if you’re gonna take on debt, take on enough debt that someone out there can’t afford to see you fail.